KuCoin LUNC Technical Analysis AMA Session — How High Can LUNC Go
Dear KuCoin Users,
Time : 12:00 PM - 13:37 PM, September 8th, 2022 (UTC)
KuCoin hosted a LUNC Technical Analysis AMA Session With Richard Nasr, KuCoin Cooperative Analyst, in the KuCoin Memecoins Group.
Richard Nasr, KuCoin Cooperative Analyst
Richard Nasr, a veteran trader with 10+ years' experience of hedge funds & forex, is also an early investor of crypto since 2017. He has mentored 400+ professional traders worldwide. Besides trading, he is a top analyst with 40k followers on Tradingview and a columnist for several top crypto media. Richard has invested in many potential projects with unique vision and obtained stunning returns.
LUNC Insights From Richard Nasr
Richard: Over 57% increase in market cap and 109% increase in 24h volume. Terra Classic, LUNC, had quite an exciting time in the last few days as it approached a major milestone implementation. Ever since the May crash, the community has expressed concerns over the excess LUNC supply in the market.
The 1.2% tax is aimed at solving this problem. Many traders didn't really get what the 1.2% tax is all about, so today we are going to explain it, discuss it, and then share my personal opinion about the 1.2% tax, and of course go over LUNC chart technical analysis. And I find it really interesting, as this is all happening around the ETH Merge event as well.
Richard: All on-chain LUNC transactions will be subjected to a 1.2% tax. This includes wallet and smart contract interactions. This simply means that 1.2% of all LUNC tokens exchanged for a given value will be destroyed at the time of the transaction (that includes buying and selling).
However, LUNC trades on exchanges might not support or be eligible for the tax. (we will talk about this in a bit, and why it is important). The idea behind the tax is that it will help reduce LUNC’s oversupply. One of the major downsides is that it will make Terra Classic on-chain transactions "more expensive". But that is a price that the community "is willing to accept" - this trade-off in favor of a deflationary outcome.
Q: Will the tax proposal be approved?
Richard: Despite the recent crumbling of its network, many traders, communities and influencers were still supporting LUNC.
LUNC's community is exhibiting promising signs of revival as '#LUNCcommunity' has been trending on Twitter. The community has aided the coin's recovery by passing critical proposals on LUNC's burn in the hope to recoup the losses of the previous meltdown. The idea of taxing LUNC transactions first came in June. Still, a more comprehensive proposal by community member Edward Kim earlier this month has gained traction. Since then, LUNC community showed positive feedback about the tax proposal which is shown through social media and by the market price increase.
LUNC is presently dealing with an increase in social volume. This has been evident in the past few days, alluding to the fact that more traders are paying attention to current events. In a tweet yesterday, LUNC Burn, a Twitter account dedicated to tracking LUNC burn activities, disclosed that the 1.2% tax proposal for LUNC will be available for voting by September 10 and, if approved, activated around September 20.
The proposed 1.2% LUNA burn tax will be published in the Terra Classic governance system before the next day September 10. The community will have 7 days to cast their votes, and if the proposal is approved (as expected), the activation of the automatic burning of LUNA will take place on September 20 or before.
In my opinion, yes most probably the Tax proposal will be approved, as LUNC community will do anything to support the project.
Q: Will the mainstream CEX follow the tax mechanism?
Richard: Which brings us to our next question: How about the mainstream CEX? Will they follow the tax mechanism? And most importantly: Why is it very important for CEX to support the tax mechanism?
Because most of LUNC transactions happen through exchanges. So we want as many exchanges as possible to support it, to maximize the impact.
KuCoin supporting the burn would make it the biggest exchange with the highest 24h volume so far.
Q: How LUNC will be burnt if the proposal is conducted?
Richard: Basically the commission of 1.2% will be used to repurchase LUNC tokens to then send them to the official LUNC burn wallet announced by the community. The burn already started.
As you can see, the third biggest contributors now is "LUNC DAO". LUNC DAO is a validator. They are grabbing their profit from their validator node and they using that to burn LUNC.
As you can see, the circulating supply is dropping due to the burn so far. Just like LUNC DAO, validators, communities and exchanges are burning LUNC too to support the event even more. Not only through the 1.2% tax as proposed.
Q: Will the tax boost the price of LUNC?
Richard: If yes, how and why?
The event already boosted LUNC as we experienced a tremendous rise in price this week as people are very excited about the event. We can clearly see that Terra Classic has reduced its weighted emotion indicator in favor of bulls. These developments may put LUNC into a strong accumulation phase now that investors are growing more open to the network.
But technically, how much would the burning (proposed tax) boost the price of LUNC?
As other projects such as the Shiba Inu (SHIB) are already doing, token burning has proven to be an effective supply control measure to keep the availability of a crypto at bay. In the case of LUNA, this new tax of 1.2% will trigger the burning of LUNC with each transaction made with the Terra Luna Classic cryptocurrency. This burn's ultimate aim would be to bring down the LUNC's supply from 6.5 trillion to 10 Billion. Please bear in mind the word "ultimate aim" it might not get this low (to 10 Billion) and this will required a lot of effort and time. While this mechanism creates a clear path for a decrease in supply, the corresponding demand could also see a substantial rise in the coming times.
All in all, the value of the digital asset is still significantly down from where it was trading before the crash, but a sustained burn could help recover some of those losses.
Q: Will LUNC reach $1?
Richard: Data from CoinMarketCap indicates that the circulating supply of Luna Classic (LUNC) is currently 6.15 trillion tokens. Even if all 6.15 trillion are exchanged daily, only around 700 billion (1.2% of the 6.15 trillion) would be removed from circulation, leaving 6.07 trillion total. Thus as you can see, its effect isn't instant. We will need a couple of weeks/months to lower the Circulating Supply significantly.
The aggressive pump in LUNC now is mainly because of traders getting excited about buying LUNC before the event. If the price of LUNC were to rise to $1, the market capitalization for the network would be around $6 trillion. $6 trillion would be 6 times the size of the TOTAL crypto market cap which we all know is not realistic. For LUNC to reach 0.1$, its market cap would be around 600 billion. which is almost double the BTC market cap.
So in my opinion, LUNC getting to 0.001 or 0.01 is possible if everything goes well. But anything above that wouldn't be realistic as per the current data. Unless the circulating supply is dropped aggressively (as mentioned at the start) => the ultimate aim would be to bring down the LUNC's supply from 6.5 trillion to 10 Billion.
Q: LUNC Technical Analysis
Since August 24, we are up around 580%. During this aggressive movement upward, LUNC paused twice forming demand zones as highlighted on the chart.
We are clearly bullish making higher lows and higher highs and we are currently in an impulse phase. The last major low is around the green zone.
Here is the view from H1 showing both trendlines.Brown trendline showing that we are overall bullish from a long-term perspective. And the blue trendline showing we are bullish also from a medium-term perspective.
If we trade lower from here to make a correction => the lower blue trendline and green zone from H4 would be our first support where we can look to buy setups.
Here is the view from M30 showing that we are also bullish from a short-term perspective trading above the orange trendline.as long as we are above the orange trendline, we will be bullish and expect LUNC to rise
If we break the orange trendline downward, then we would enter into a correction phase till the medium-term trendline in blue and so on.
Free-Ask from KuCoin Community
Q: Does ETH Merge have a thing to do with the $LUNC burn proposal? Are they connected for some reason?
Richard: I also find this an interesting coincidence as I mentioned in the first message in the introduction. I don't believe they are connected, as there is no solid evidence for it (unless we want to dive into conspiracy theories lol). As I mentioned last time in a different Kucoin session, I believe this September is different (usually it is bearish) because of ETH merge and now LUNC burn.
Q: Is it the right time to invest in $LUNC and $LUNA while considering the direction of BTC? Secondly, are there big things happening after these events to $LUNC? If yes, what is the expected loss in price per coin when things get crushed?
Richard: LUNC is already bullish. LUNA is still waiting for a break of the range as shown in my previous answer now. LUNC burn is a special event now, which usually doesn't really care about the overall situation of the market. Even if BTC goes down, LUNC is hyping now and burning tokens. so it will stand strong (if everything goes well and as intended).
Q: Does the fact that LUNC has a connection with LUNA and its already established protocols make LUNC the strongest memecoin with the most utilities and actual coin usage?
Richard: The thing is, developers no longer use the network to power decentralized apps (dApps). It is also no longer supported by a serious developing team that can introduce upgrades and new features to grow the ecosystem. So for now, no true utility. As you mentioned, LUNC is now very similar to a memecoin. That's why it is discussed here in this group.
Q: It happened to me as a normal trader, when the price of a coin starts to go up, most of the time after buying the coin the price suddenly goes down. Is there any chance of that happening with $LUNC? What do you think $LUNC should buy now?
Richard : I totally agree, if a certain coin is trading higher aggressively, do not buy out of FOMO, always wait for a retest to jump in, and of course wait for extra confirmation. That's why I highlighted the trendlines on the chart to know where to look for buy setups. And of course, usually during these events, a sudden shift in momentum happens, so be aware of the risk and don't invest all your capital.
Q: Some crypto exchanges might not support the 1.2% tax burn so what do you think about that?
Richard: As mentioned, the more exchanges support the 1.2% tax burn, the higher the impact. I believe with Kucoin supporting now, more big exchanges will follow. And even if they don't follow, if the vote went well, the burn will have an impact for months to come. And LUNC supporters will be using the exchanges that support the burn.
Notice: KuCoin does not provide financial advice. Please do your own risk assessment when deciding how to invest in cryptocurrency and blockchain technology.
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